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Blog By: Beth Ede, SPHR

In early May 2013, a number of individuals and employer groups filed suit challenging the ability of the federal government to provide tax credits under the Affordable Care Act (ACA) to individuals in states with federally-facilitated Exchanges (FFEs). 


The case of Halbig v. Sebelius was filed in response to an IRS rule that authorized subsidies in all states, including those with FFS.  The filers argued that the IRS rule authorizing subsidies in all states conflicted with the text of the ACA – asserting that, according to the law’s plain language, the ACA only authorized subsidies to be provided in states that had established their own Exchanges (state-facilitated Exchanges). 


On January 15, 2014, a federal district court judge rejected the challenge, ruling that subsidies can be provided to individuals in states with FFEs.  The judge stated that the language of the statute, along with the structure and purpose of the law, make it clear that Congress intended to make the premium tax credits available in both state-facilitated Exchanges and FFEs.


So what’s the big deal to employers?  This may have significant implications for employers due to ACA’s employer mandate. 


Under the mandate, large employers may face penalties beginning in 2015 if they do not offer coverage to their full-time employees that meet certain requirements.  These penalties only apply if an employee receives a subsidy to buy coverage through an Exchange.  If the subsidy would only be available in state-facilitated Exchanges, employers would not be subject to penalties for employees living in states with an FFE.


At this point, it’s important to note that this is just one ruling, with other lawsuits in other states still pending in federal courts.  As we have said many times before. . .Stay Tuned!


Remember to keep health care reform compliance focused on your radar.  If WA can be of further assistance to you, please feel free to contact us.

Posted 2:21 PM  View Comments

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